ECONOMICHISTORY
Story of a Port Town
The Evolving
Economic Role
of Baltimore’s
Waterfront and
Location
BY CHARLES GERENA
VANE BROTHERS COMPANY
The history of Baltimore’s harbor, shown
here in 1910, stretches back to colonial days.
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Region Focus • Spring 2003
y American standards, Baltimore is
an ancient city. Its storied history
stretches back to colonial days, when
its port began to ship farm goods from the
mid-Atlantic to people around the globe.
During the Revolutionary War, for
instance, American soldiers “were fed by
the grain and flour delivered from Baltimore,” describes Geoffrey Footner, a
Baltimore-based author and maritime
historian. Goods also were shipped from
the city to France, where they were
transported to the Dutch Islands and
traded for weapons and gunpowder
needed by the Continental Army.
This is just one of many instances of
how Baltimore’s economic life has been
shaped by armed conflict. More importantly, it illustrates how the city’s waterfront and location
have been central
to its growth and
prosperity — a fact
that continues to
this day.
The city was
founded as Baltimore Town in 1729.
Its 60 acres surrounded one of the
harbors formed by
the Patapsco River,
which flows eastward into the
Chesapeake Bay.
Towns emerged at
other harbors as
well, including Jones
Town in 1732 and
Fells Point in 1763.
(By 1773, the three
towns had merged
to form the city of
Baltimore.)
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Baltimore’s founders saw the potential for a port. The harbor could access
Atlantic trade routes via the Chesapeake
Bay, yet it was better protected than
Norfolk, Va., and other Bay ports
because it was farther inland. Although
the harbor was shallower and harder to
navigate than Fells Point, the problem
was dealt with by constructing piers that
reached into friendlier waters.
At the same time, Baltimore’s harbor
was close to sources of food production.
Down the Chesapeake Bay were communities where the land was fertile and
the water teemed with seafood. Farmers
in Pennsylvania, Delaware, and western
Maryland were nearby as well.
Finally, Baltimore was on the “fall
line,” a geological transition between
the hard rock of the Piedmont and the
softer soil of the Coastal Plains. When
the Patapsco or any river or stream
flows over this ridge, it creates falls and
rapids that impede water travel. As a
result, Baltimore’s harbor was a good
place to offload goods from ships and
transport them inland using other
means of transportation.
All Baltimore needed were markets
to serve. During the 17th and early 18th
centuries, Maryland had no pressing need
for a major trade center. “The initial
trade… was in tobacco, and it was controlled in London,” says John McCusker,
professor of American history and economics at Trinity University. Also, historians note that tobacco plantations
mostly used their own docks or utilized
ports that were close to the mouth of
the Bay, such as Norfolk or St. Marys in
southern Maryland.
Baltimore found its market niche
when tobacco prices collapsed and it
became more expensive to cultivate the
AIRLAND-INDUSTRIAL PHOTO CO.
golden leaf in the early 18th century.
Tobacco farmers began seeking more
profitable crops to grow. “They discovered that their land better produced
grains than tobacco, and a market grew
for the former,” says McCusker. “That
gave rise to local merchants who organized the grain trade and the exchange of
other goods to farmers.”
Demand for corn and wheat came
from Europe and Caribbean nations
where French, British, and Swedish plantations operated. “Sugar was such a profitable crop that it was economically
disadvantageous for the plantations ... to
grow their own food. They bought food
from someplace else,” explains Matthew
Crenson, a political science professor at
Johns Hopkins University who has
studied Baltimore’s social and economic
progress for three decades.
Baltimore took advantage of the
growing grain trade. Not only did it
offer access to local grain farmers, but
it had streams like Jones Falls and
Gwynns Falls that flowed downhill into
the harbor. This provided plenty of
waterpower for grinding wheat and
corn into flour, which traveled better
than raw grains.
“Wheat came in wagons from
western Maryland and Pennsylvania
into Baltimore where the mills ground
it into flour,” describes Crenson. Other
accounts describe shipments of
produce coming into Baltimore, produced by farmers who were settling and
developing Maryland’s “backcountry”
in the northern and western part of the
state. Wharves, warehouses, and shipyards arose along the waterfront of Baltimore Town and Fells Point to handle
these commodities.
Despite this growth, other colonial
ports matured faster than Baltimore did.
“You didn’t have to sail the whole way
into the Chesapeake Bay like you do to
get to Baltimore,” notes John Kellett,
director of the Baltimore Maritime
Museum. The distance between Baltimore and the mouth of the Bay in
Norfolk is about 150 miles, “and back in
the days of sailing that was pretty long.”
Also, Kellett says the wind currents
could be “fluky,” adding days to a voyage.
The Maryland Port Administration has geared the Port of Baltimore to serve certain
niches in container transport, including automobiles. Today, the Port is the top East Coast
exporter of vehicles.
istance and wind currents became
irrelevant when the American
Revolution erupted in 1775. While
the British shut down the Bay’s outer ports
and occupied centers of commerce like
Philadelphia, Baltimore managed to stay
out of the clutches of the redcoats and
keep the goods flowing, partly by using
homegrown, locally owned clipper ships.
Food and supplies reached revolutionaries
to the north and south of Baltimore, while
flour and other goods continued into
Caribbean markets.
“The War of Independence ... proved
to be a boon for Baltimore merchants,
not only because rival ports were more
effectively blockaded by the British but
because Spanish ports in the
Caribbean, normally closed to American shipping and flour, were opened for
the war’s duration,” wrote economist
Geoffrey Gilbert in a 1977 journal
article. “In the post-war period, Baltimore’s flour trade to Europe and the
West Indies showed rapid gains.” By
the 1790s, the city commanded 26
percent of America’s flour exports to
the West Indies, where the major ports
of entry for the Caribbean were based.
As more flour moved out of Baltimore, more capital flowed into the city.
“Much of the early commercial development [in Baltimore] was underwritten by Philadelphia merchants,” says
McCusker. Then Maryland businessmen jumped on the bandwagon.
This capital financed the develop-
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ment of a variety of support industries
in Baltimore. Shipbuilding at Fells
Point expanded, while ironworks
cranked out fittings for ships and parts
for mills.
Additionally, goods started coming
from Caribbean plantations back to
Baltimore. They included sugar, coffee,
and a distinctive commodity called
guano — dried bird and bat excrement
that tobacco and cotton plantations
used as fertilizer. The need to store
these commodities spurred the construction of more warehouses.
Baltimore was an established port
town by the turn of the 19th century,
often benefiting from turmoil abroad
according to historical geographer
Sherry Olson. “Of great importance to
Baltimore were the perennial naval
warfare between England and France,
which drove up flour prices, and the
frequent changes in management in the
sugar islands of the West Indies, major
importers of wheat,” Olson noted in
her 1997 book on the city’s history.
“Baltimore merchants profited from
the interruption of European shipping
and exploited the ups and downs in the
price of flour.”
ew York merchants viewed the
progress of their Southern
competitor with envy. Baltimore
had a strong grain trade with overseas
markets and was in a good position to
increase its domestic trade because it was
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Spring 2003 • Region Focus
37
Baltimore’s Waterfront Continues to Change
The Inner Harbor was where Baltimore began
to redevelop its waterfront in the 1970s and
1980s. Since then, developers have seen value
in the harbor views and unique structures
of Canton, Fells Point, and other waterfront
communities. Here is a sample of the many
industrial buildings that have found new life
or have been razed to make way for new
retail, office, and residential development.
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Inner Harbor
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9
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Fells Point
3. HarborView—Luxury condominiums and
apartment homes
4. Inner Harbor East—20-acre, mixed-use
development includes two Marriott hotels,
Sylvan Learning Centers headquarters, a luxury
apartment building, and a planned entertainment complex
5. Bagby Furniture Building— Conversion of
warehouse into Class-A office space
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1
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6. Bond Street Wharf— Class-A office complex
built on site of warehouse
10. The Anchorage —Luxury condominiums built
near waterfront for marina access
7. Brown’s Wharf— Renovation of coffee
warehouse to house offices and specialty retail
11. Canton Cove —Redevelopment of factory
into luxury condominiums
8. Henderson’s Wharf— Renovation of tobacco
warehouse into a residential complex, inn, and
marina
12. Lighthouse Point— Licorice factory renovated
into a 16-acre development with apartments,
retail and office space, and a marina
9. The Can Company—American Can Co. plant
converted into a retail and office center
—C H A R L E S G E R E N A
geographically closer to Ohio and other
Midwestern markets than New York. In
addition, the city stood to gain a major
transportation advantage from the
National Road, a federal project begun in
1815 to link Cumberland in northwestern
Maryland to St. Louis. Maryland officials
promised to link Baltimore to Cumberland
by expanding several state roads.
New York countered Baltimore’s geographic advantage by completing the
Erie Canal between the Empire State
and Lake Erie in 1825. The 360-mile
canal transported East Coast goods to
Midwest customers more quickly than
Baltimore could by using the National
Road, which only reached Wheeling,
W.Va., at the time. That meant shipments from Baltimore had to be offloaded onto ships to finish their journey
on the Ohio River. Even when the
National Road was finished in 1833, the
older portion was in poor condition.
The Erie Canal threatened Baltimore’s dominance in another way. It
enabled Midwest agricultural goods to
reach East Coast markets. This eroded
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Canton
Locust Point
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1. Tide Point—Proctor & Gamble soap factory
turned into an office complex for technology
and service firms
2. Phillips Foods Inc.— Coca-Cola plant
redeveloped into office and production space
for the seafood manufacturer
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Region Focus • Spring 2003
demand for grains and produce from
Chesapeake Bay farmers, which were
major users of Baltimore’s port.
After several failed attempts to build
a canal system, a group of Baltimore
merchants and bankers formed a committee to find a way for the city to boost
its Midwest trade. They boldly determined that a railroad would be the best
way to compete with the Erie Canal,
since it would be faster and cheaper to
maintain than the National Road.
The Baltimore and Ohio Railroad
was chartered in 1827 and took about
30 years to finish, creating the country’s
first public railroad that linked Baltimore to St. Louis. Others developed
rail links to Baltimore, including the
state’s Western Maryland Railway and
countless small enterprises.
Although the railroads ultimately
brought more competition for Chesapeake farmers, it enabled Baltimore to
reap the benefits of its port and location
throughout the 19th century. Warehouses in Canton, Fells Point, and other
waterfront neighborhoods were built to
pack seafood and produce for shipping,
while container manufacturers such as
the American Can Co. were established
to support this activity. Bakeries opened
to take advantage of the plentiful supply
of flour. Coal could be delivered to Baltimore cheaply, supporting the growth
of industrial production.
“Baltimore evolved from being the
link between the agrarian world and the
markets of Europe, to being a manufacturing town,” notes Kellett of the Maritime Museum.
y 1860, Baltimore was the nation’s
fourth-largest city and a commercial
hub for the South. But the city
would soon taste the bitter side of war.
A month after a mob attacked a
Massachusetts regiment headed to
Washington, D.C., to protect it from
invasion, federal troops entered Baltimore in 1861 and declared martial law.
Their occupation persisted until the end
of the Civil War four years later.
The war severely damaged Baltimore’s economy. “Suspension of com-
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munication with Southern customers,
and the liability of capture and repeated
interruptions in Western trade, almost
paralyzed Baltimore’s commerce … and
resulted in its diversion to other cities,”
wrote Pearle Blood in a 1937 journal
article. “South American imports, which
had been carried chiefly in Baltimoreowned sailing vessels, were transferred
to foreign ships” to avoid plundering by
Confederate troops.
While Pittsburgh and other cities
farther away from the fighting developed
their industrial muscle, Baltimore industry atrophied. Its only growth sectors
were tied to the railroad or the port,
both of which served as strategic transit
lines for Union supplies and troops.
Baltimore’s economy continued to
feel the effects of the Civil War long
after the conflict had ended. Plantations
lost the economic efficiencies of slave
labor, increasing the cost of farming and
reducing the flow of agricultural goods
through the city. Worse, local investors
were less willing to bet their capital on
the city’s industrial sector, discouraged
by the loss of the city’s comparative
advantage in manufacturing.
“Firms in Baltimore couldn’t raise
money through the sale of stock [so]
they had smaller work forces,” describes
Johns Hopkins’ Crenson. “The perworker investment in machinery was
lower than it was in other cities, which
indicated that Baltimore wasn’t keeping
up technologically. The result was that
Baltimore industry didn’t grow as
rapidly as it did elsewhere in the postCivil War period.”
altimore entered a prolonged
period of redeveloping the value of
its water access and geography that
lasted throughout the 20th century.
Broader changes in the transportation industry added to the challenge.
The construction of the interstate
highway system provided a better way
of moving goods and people than the
railroad, undermining the advantages
that Baltimore’s rail links had once
afforded. The development of refrigerated trucks meant that warehouses and
packaging facilities no longer had to
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locate close to the source of production.
These operations gradually relocated
from Baltimore, moving wherever trucking was available and other economic
conditions were more favorable.
The city began losing general cargo
traffic to New York after World War II,
mainly because its port facilities weren’t
up to date. “…The railroads were unwilling to make room for the developing
truck traffic that was changing the face
of American transportation,” noted
Robert Keith in his 1982 chronicle of
Baltimore. Moreover, the thin peninsulas protruding into the harbor were great
for offloading cargo onto trains, but
created bottlenecks for trucks. Finally,
“piers were reaching a state of decay, and
the railroads were neither willing nor
able to maintain them.”
Government officials have tried to
adapt Baltimore’s waterfront to changing times. As ships grew larger to carry
more cargo and accommodate vesselsharing agreements among carriers, city
and federal funds were deployed several
times to deepen and widen the port’s
harbors and channels. The state’s Maryland Port Administration (MPA) took
over operation of most of Baltimore’s
maritime facilities in 1956 to make
much-needed improvements. Three
years later, the MPA started building
Dundalk Marine Terminal on the southern edge of the city’s waterfront to
accommodate truck-borne cargoes.
Across from Dundalk, it devoted $30
million to upgrade the railroad piers in
Locust Point in 1964.
In subsequent years, the MPA geared
the Port of Baltimore to serve certain
niches in container transport, including
forest products and rolling cargo such as
automobiles and farm equipment. Baltimore has become the top East Coast
exporter of vehicles and third in the
nation for total car trade. In the past 10
years, more than 3.5 million vehicles have
rolled through Baltimore.
Meanwhile, port activity gradually
migrated from the shallower Inner Harbor
to Canton and points farther south where
the water is deeper, leaving behind empty
warehouses and industrial sites. Urban
renewal efforts in the 1970s and 1980s
brought retail projects and museums to
the Inner Harbor, while commercial and
residential developers recognized the value
of other sites along Baltimore’s waterfront
in the 1990s (see sidebar on p. 38).
Today, the city’s water-based economy
continues to evolve from shipping and
factories to services and recreation. “The
success of the Inner Harbor has begun to
spread, particularly to the east towards
Fells Point,” describes Walter Sondheim
Jr., a Baltimorean who has been involved
in waterfront redevelopment since 1970.
“The waterfront has become a center for
commercial activity, particularly for office
space and hotels.”
However, Baltimore’s historic harbor
may only be succeeding in refocusing
economic activity in the city. Development of a services sector along the waterfront “has created vacancies in the
financial district downtown,” admits
Sondheim. Some of this space is beginning to be redeveloped, however, benefiting from downtown’s proximity to the
waterfront. Also, income levels are higher
for residents who live by the water compared to other neighborhoods.
Sondheim argues that there are ways
to spread around that growth. “Some of
the tax revenues produced by the Inner
Harbor finds its way into neighborhood
development,” he notes. As new waterfront development increases the property tax base and attracts tourism
dollars, the economic role of Baltimore’s
harbor will continue to evolve.
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READINGS
Blood, Pearle. “Factors in the Economic Development of Baltimore, Maryland.” Economic
Geography, April 1937, vol. 13, no. 2, pp. 187-208.
Gilbert, Geoffrey N. “Baltimore’s Flour Trade to
the Caribbean, 1750-1815.” Journal of Economic
History, March 1977, vol. 37, no. 1, pp. 249-251.
Keith, Robert C. Baltimore Harbor: A Picture History.
Baltimore: Ocean World Publishing Co., 1982.
Olson, Sherry H. Baltimore: The Building of an
American City. Baltimore: Johns Hopkins University
Press, 1997 (revised edition).
Visit www.rich.frb.org/pubs/regionfocus for
links to relevant Web sites.
Spring 2003 • Region Focus
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